NATHULAL y v. Nanhelal and Anr. L.R. 57 I.A. 333 & Ors.

(i) Jn considering whether a pelrson is willing to perform his part of the colilliact the sequence in which the obli~ations undelr a contract are to be performed µmst be taken into account. By virtue of s. 4 of the Tral)sfer of Property Act the chapters and •ections of the Transfer of Property Act which relate to contracts are to be taken as part of the Indian Contract Act, 1872. If therefore under the terms of the contract obligations of the parties have to be performed in a certain sequence, one of the parties to the contract cannot require compliance with the obliga ti<!_ns by the other party without in the first instance performing his own part of the contract which in the sequence of obligation is performable by him earlier. to have (i;) The appellant had expressly undertaken revenue records rectified by securing the deleiion of his brothelr's name from the revenue records, and it was further an implied condition of the contract that the appellant would secure the sanction of transferor under s. 70( 4) of the Madhya Bharat Land Revenue and Tenancy Act, 66 of 1950. The first condition was not fulfilled in due time and the second condition was never fulfilled. The repeal of Act 66 of 1950 by the Madhya Pradesh Land Revenue Code, J 959 did not have retrospective operation. the Collector · (iii) In view of the arrangement made by the respondent it was clear that he had at all relevant times made necessary arrangements for paying the amount due, but so Jong as the appellant did not carry out h'.s part of the contract the respondent could not be called upon It must therefore be held that the respondent was · b'alance of the price. [859 ·at all times ready and willing to carry out his part of th' econtract. E'H] to pay Motilal & oOrs . . v. Nanhelal and Anr. L.R. 57 I.A. 333, Mrs. Chandhee Widya Vat! Madden v. Dr. C. L. Katia! & Ors. [1964] 2 S.C.R. 495 and Bank of India Ltd. & Ors. v. Jamsetji A, H. Chino,v and Ml s. Chinoy and Co., L.R. 77 I.A. 76, 91, referred to. E CIVIL APPELLATE JURISDICTION : Civil Appeal No, 2345 of

1966. F G H Appeal from the judgment and decree dated December 3, 1965 of the Madhya Pradesh High Court, Indore Bench in First Appeal No. 56 of 1961. I. N. Shroff and B. L. Joshi, for the appellant. R. Gopalakrishnan, for the respondent. The Judgmen{ of the Court was deliverecl by Sh~, ~· Nathulal-appellant in this appeal-was. the owner of a. Gmnmg Factory constructed on a plot of agricultural land beanng Khasra No. 259I1. The land stood entered in revenue records in the name of Chittarmal--brother of Nathulal. On February 26, 1951, Nathulal agreed to sell to Phoolchand the land and the Ginning :;"actory for Rs. 43,0J 1/-. He received in part payment Rs. 22,011/-, and put Phoolchand in possession of the property. Phoolchand · agreed to pay the balance on or before May 7, 1951. The terms of the agreement were reduced . . to writing in counter-part and were duly signed by the parties. '.. On the plea that Phoolchand had failed 10 pay on the due date the balance of price, Nathulal rescinded the contract on Octo ber 8, 1951 and commenced _an action in May, 1954 in the Court of the District Judge, Nimar, for a decree for possession of the land and the factory and for mesne profits from the date of delivery till possession was restored io him, alleging that Phoolchand .was a trespasser because he had contrary to 'the express tcrms of the agreement made default in payment of the balance of the purchase price on or before May 7, 1951.

Phool chand contended that Nathulal had failed to get the name of Chittarmal "deleted" from the revenue record according to the terms of the agreement, that he, Phoolchand.. was ready and willing to pay the balance of Rs. 21,000/-, that he had sent a tr.legram on May 7, 1951, offering to pay the balance against execution of the sale deed, that the agreement had been unlaw fully altered by Nathulal after ex; ecution by adding a clause by which the possession of Phoolchand in default of payment of money on or before May 7, 1951, was declared unlawful. The Trial Court decreed the suit holding that Phoolchand committed breach of contract in that he failed to pay the palance In appeal the H'.igh Court due by him on or before the due date. of Madhya Pradesh reversed the decree. The High Court dec lared that Nathulal was entitled to the balan_cr. of the conside111>· tion as also 'mesnu profits" at the rate of Rs.

1,500/- per annum from May 7, 1951 till the date on which Rs. 21,000/- were deposited by Phoolchand within two months of the passing of the decree. Subject to this direction Phoolchand was allowed to retain possession of the entire property, i.e., land Khasra No. 259/1 including the Ginning Factory and structures standing It was directed that if Phoolchand, committed on the land. default Nathulal may claim possession of the entire property with mesne profits at the rate of Rs. 3,000/- per annum from the date he was out of possession and till the date on which possession was delivered. The cross-objections filed by Nathulal relating to mesne profits were disposed of in the light of the directions given in the decree. With certificate granted by the High Court this appeal has been preferred by Nathulal. In the view of the Trial Court Phoolchand was unable to procure the amount of Rs. 21,000/- which he had agreed to pay on or before May 7, 1951 and on that account he had com mitted breach of the contract.

The High. Court held that Nathu lal was not guilty of breach of contract, for, Phoolchand had arrancred with a Bank to borrow upto Rs. 75,000/-, when needed by hi~, and Phoofchand had on that account sufficient resour~es at his disposal to enable him to pay the amount due. The Tnal · NATHULAL V. PHOOLCHAND (Shah, /.) 857 Court and the High Court have held ·Jiat Phoolchand failed to pay the amount on or before May 7, 1951. The have also held that he had not made the tender as pleaded by him. Under the terms of the agreement Nathulal had undertaken to get the name of his brother Chittarmal removed from the revenue records and to get his own name entered, but the lands. continued to stand recorded in the name of Chittarmal till Octo ber 6, 1952, and before that date Nathulal rescinded the con tract. Again by virtue of s. 70 ( 4) of the Madhya Bharat Land Revenue and Tenancy Act 66 of 1950, Phoolchand not being an agriculturist the land could not be sold to him without the sanc In the absence of any specific tion of the State Government. clause dealing with this matter, a condition that Nathulal will secure the sanction under s.

70 ( 4) after paying the appropriate fee must be implied in the agreement for it is well-settled that whereby statute property is not transferable without the permis sion of the authority, an agreement to transfer the propery must be deemed subject to the implied com:lition that the transferor will obtain the sanction of the authority concerned : see Motilal and Others v. Nanhe/al and Another(') and Mrs. Chandhee Widya Vati Madden v. Dr. C. L. Katia! & Others("). Phoolchand could be called upon to pay the balance of the price only after Nathulal performed his part of the contract. Phoolchand had an ~mtstanding arrangement with his Banker to enable him to draw the amount needed by him for payment to Nathulal. To prove himself ready and willing a purchaser has not necessarily to produce the money or to vouch a concluded scheme for financing the transaction : Bank of India Ltd. & Ors. v. Jamsetji A. H. Chinoy and Messrs.

Chinoy and Company('). The High Court proceeded to dee; de the case largely upon the view that Nathulal committed breach of contract. But the question whether 'Nathul~l had committed the breach is not of much significance. Nathulal was the owner of the land : he had executed no conveyance in favour of Phoolchand in the land or the factory. Nathulal had sued for possession relying upon his . title, and Phoolchand could defeat that claim if he established his defence of part-performance under s. 53A of the Transfer of Property Act. The argument raised by counsel for Nathulal, that by virtue of s. 70(8) of the Madhya Bharat Land Revenue and Tenancy H Act, the plea of part performance is not available to a person put (I) L.R. 57 l.A.333 (2) (1964] 2 S.C.R. 495. (3) l..R. 77 I.A. 76, 91. in possession of the property under a contract of sale, has, in our judgment, no force. Section 70 ( 8) provides : "No sale under this section shall be deemed to be valid until the sale deed effecting such a sale has been registered in accordance with the law of registration in force for the time being".

But this clause only requires that not only the conditions pres ci:ibed by s. 70, but registration of sale deed in accordance with the law of registration for the time being in force is a condition required to be complied with before a sale is deemed valid. There is no sale in the present case, and Phoolchand is not relying upon any sale. He is relying upon a contract of sale and equity which he may set up to defend his possession against the claim made by Nathulal. To the making of such a claim, relying upon the doctrine of part performance in s. 53A of the Transfer of Property Act, there is nothing in s. 70 ( 8) of the Madhya Bharat Land Revenue and Tenancy Act 66 of 1950 which may operate as a bar. The c. nditions necesSat)' fer making out the defence of part perfomance to an action in ejectment by the owner are : ( 1) that the transferor has contracted to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty; (2) that the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in posses sion continues in possession in part performance of the contract; (3) that the transferee has done some act in fur therance of the contract; and ( 4) that the transferee has performed or is willing ~ to perform his part of the contract. · If these conditions· are fulfilled then notwithstanding that the contract, though required· to be registered, has not been regis tered, or, where there.is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the Jaw for the time being in force, the transferor or any person claiming under him is debarred from enforcing against transferee any right in respect of the property of which the A transferee has taken or continued in possesion, other right expressly provided by the terms of the contract. than a 11 There is in this case a contract to transfer for consideration immoveable property by writing signed by Nathulal from which the terms necess; uy to constitute the transfer can be asctrtained with reasonable certainty.

In part performance of the contract, Phoolchand has taken possession of the property and he had in pursuance thereof paid an amount of Rs. 22,011/-. The argu ment raised by counsel for Nathulal that the act done in pur suance of the contract must be independent of the terms of the contract cannot be accepted. The first three conditions for the _,, defence of part performance to be effectively set up by Phoolchand "' exist. Mr. Shroff for Nathulal however contends that Phool chand was not wiiling to perform his part of the contract. to have Nathulal had expressly undertaken revenue records rectified by securing the deletion of Chittan:n,al's name, and it was an implied condition of the contract that Nath)ilal will D secure the sanction of the Collector to the transfer under s: 70 ( 4) of the Madhya Bharat Land Revenue and Tenancy Act 66 of 1950. The first condition was not fulfi!:d till October 6, 1952 and the second condition was never fulfilled.

We are unable 10 agree with Mr. Shroff that the repeal of the Madhya Bharat Act 66 of 1950 by the Madhya Pradesh Land Revenue Code, E 1959, has retrospective operation. In considering whether a person is willing to perform his part of the contract the sequence in which the obligations under a contract are to be ptrformed must be taken into account. The argument raised by Mr. Shroff that Nathulal was bound to per form the two conditions only after the amount of Rs. 21,000 - :F was paid is plainly contrary to the terms of the agreement. By virtue of s. 4 of the Transfer· of Property Act the chapters and sections of the Transfer of Prdperty Act which relate to contracts If, are to be taken as part of the Indian Contract Act, 1872. therefore, under the terms, of the contract the obligations of the parties have to be performed in a certain sequence, one of the .C parties to the contract cannot require compliance with the obliga tions by the other party without in the first instance performing his own part of the contract which in the sequence of obligations is performable by him earlier.

In view of the arrangement made by Phoolch~1•d it was clear that he had at all relevant times made necessary arrangements for lH paying the amount du~. but so Jong as l'\athulal did not carry out his part of the contq1ct, Phoolchand could not be called upon to pay the balance of !!he price. It must, therefore, be held, that ,,, 860 SUPREME COURT REPORTS [1970]2 S.C.R. Phoolchand was at all relevant times willing to carry out his part A. of the. contract. The appeal fails and is dismissed with cost. Y.P. Appeal dismissed.